In 2013 Andy Ransom was appointed CEO of Rentokil Initial plc (LON:RTO). First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Andy Ransom’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Rentokil Initial plc has a market cap of UK£8.0b, and reported total annual CEO compensation of UK£4.4m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at UK£750k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over UK£6.1b and the median CEO total compensation was UK£3.6m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
So Andy Ransom receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at Rentokil Initial, below.
Is Rentokil Initial plc Growing?
Rentokil Initial plc has reduced its earnings per share by an average of 45% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 10%.
Sadly for shareholders, earnings per share are actually down, over three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has Rentokil Initial plc Been A Good Investment?
Most shareholders would probably be pleased with Rentokil Initial plc for providing a total return of 118% over three years. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
Andy Ransom is paid around the same as most CEOs of large companies.
We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So we doubt many are complaining about the fairly normal CEO pay. So you may want to check if insiders are buying Rentokil Initial shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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